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FOREIGN INVESTORS’ RESPONSIBILITIES AND CONTRIBUTORY FAULT IN INVESTMENT ARBITRATION
Published online by Cambridge University Press: 07 October 2020
Abstract
Some investment arbitration tribunals have relied upon the principle of contributory fault to conclude that claimants have contributed to their own loss and should accordingly receive less compensation. The principle has not, however, been coherently applied. After analysing the use of contributory fault by tribunals and identifying factors contributing to an incoherent approach, the authors conclude that carefully crafted treaty provisions can improve the consistency of international investment arbitration by fostering a more coherent approach to both contributory fault and foreign investors’ responsibilities.
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- Copyright © The Author(s) 2020. Published by Cambridge University Press for the British Institute of International and Comparative Law
Footnotes
A previous version of this article was presented at PluriCourts’ Reforming International Investment Law Workshop (Oslo, February 2019), the University of Lausanne (Lausanne, March 2019), the International Economic Law Interest Group Business Meeting of the 113th American Society of International Law Annual Meeting (Washington, DC, March 2019), the International Law Forum at Hebrew University (Jerusalem, May 2019), and China University of Political Science and Law (Beijing, December 2019). The authors are grateful to the participants in these events for their illuminating comments. More specifically, the article benefited from the highly valuable comments of Susan Franck. Moreover, the authors thank the Editors and two Reviewers for their thoughtful comments, which allowed them to considerably improve the manuscript. Jean-Michel Marcoux also acknowledges the financial support of the Postdoctoral Fellowship of the Social Sciences and Humanities Research Council of Canada.
References
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2 See eg Glamis Gold Ltd. v United States, UNCITRAL, Award (8 June 2009) para 8 (‘The Tribunal is aware that the decision in this proceeding has been awaited by private and public entities concerned with environmental regulation, the interests of indigenous peoples, and the tension sometimes seen between private rights in property and the need of the State to regulate the use of the property. However, given the Tribunal's holdings, the Tribunal is not required to decide many of the most controversial issues raised in this proceeding. The Tribunal observes that a few awards have made statements not required by the case before it. The Tribunal does not agree with this tendency; it believes that its case specific mandate and the respect demanded for the difficult task faced squarely by some future tribunal instead argues for it to confine its decision to the issues presented’); Marion Unglaube and Reinhard Unglaube v Costa Rica, ICSID Case No ARB/08/1 and ARB/09/20, Award (16 May 2012) para 37 (‘While the subject of the protection of endangered species is an important one, the Tribunal finds that the crucial elements of this dispute involve more mundane issues of fact and law as they relate to the legality of the actions in dispute between the Parties’). For a general analysis of the ‘non-engagement of international investment law with the impact of investor activity on the local communities and the environment of the host [S]tate’, see K Miles, The Origins of International Investment Law: Empire, Environment and the Safeguarding of Capital (Oxford University Press 2013) 154–211. See also J-M Marcoux, International Investment Law and Globalization: Foreign Investment, Responsibilities and Intergovernmental Organizations (Routledge 2018) 47–54.
3 See J Gathii and S Puig, ‘Introduction to the Symposium on Investor Responsibility: The Next Frontier in International Investment Law’ (2019) 113 AJIL Unbound 1, 1.
4 See eg Ho, J, ‘The Creation of Elusive Investor Responsibility’ (2019) 113 AJIL Unbound 10, 10CrossRefGoogle Scholar; Bjorklund, AK, ‘The Legitimacy of ICSID’ in Grossman, N et al. (eds), Legitimacy and International Courts (Cambridge University Press 2018) 244–6Google Scholar.
5 See International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries (2001) UN Doc A/56/10, art 39. See also Bjorklund, AK, ‘Causation, Morality, and Quantum’ (2009) 32 Suffolk Transnational Law Review 435, 446–7Google Scholar; Urdaneta, JF Merizalde, ‘Proportionality, Contributory Negligence and Other Equity Considerations in Investment Arbitration’ in Laird, IA et al. (eds), Investment Treaty Arbitration and International Law (JurisNet 2015) vol 8, 306Google Scholar.
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7 See MTD Equity Sdn, Bhd. and MTD Chile S.A. v Chile, ICSID Case No ARB/01/7, Award (25 May 2004); Occidental Petroleum Corporation, Occidental Exploration and Production Company v Ecuador, ICSID Case No ARB/06/11, Award (5 October 2012); Hulley Enterprises Limited (Cyprus) v Russia, PCA Case No AA 226, Final Award (18 July 2014); Veteran Petroleum Limited (Cyprus) v Russia, PCA Case No AA 228, Final Award (18 July 2014); Yukos Universal Limited (Isle of Man) v Russia, PCA Case AA 227 (18 July 2014); Copper Mesa Mining Corporation v Ecuador, PCA Case No 2012-2, Award (15 March 2016).
8 See Blusun S.A. et al. v Italy, ICSID Case No ARB/14/3, Award (27 December 2016); WNC Factoring Ltd v Czech Republic, PCA Case No 2014-34, Award (22 February 2017).
9 See Gemplus S.A. et al. and Talsud S.A. v Mexico, ICSID Case No ARB(AF)/04/3 and ARB(AF)/04/4, Award (16 June 2010); Anatolie Stati et al. v Kazakhstan, SCC Case No V 116/2010, Award (19 December 2013); Quiborax S.A. and Non Metallic Minerals S.A. v Bolivia, ICSID Case No ARB/06/2, Award (16 September 2015); Rusoro Mining Limited v Venezuela, ICSID Case No ARB(AF)/12/5, Award (22 August 2016); Burlington Resources Inc v Ecuador, ICSID Case No ARB/08/5, Decision on Reconsideration and Award (7 February 2017); Caratube International Oil Company LLP and Mr. Devincci Salah Hourani v Kazakhstan, ICSID Case No ARB/13/13, Award (27 September 2017); South American Silver Limited (Bermuda) v Bolivia, PCA Case No 2013-15, Award (22 November 2018); ConocoPhillips Petrozuata B.V. et al. v Venezuela, ICSID Case No ARB/07/30, Award (8 March 2019); Perenco Ecuador Limited v Ecuador, ICSID Case No ARB/08/6, Award (27 September 2019).
10 See CME Czech Republic B.V. v Czech Republic, UNCITRAL, Dissenting Opinion of the Arbitrator JUDr Jaroslav Hándl against the Partial Arbitration Award (13 September 2001); International Thunderbird Gaming Corporation v Mexico, UNCITRAL, Separate Opinion of Thomas Wälde (1 December 2005); Bear Creek Mining Corporation v Peru, ICSID Case No ARB/14/21, Partial Dissenting Opinion of Professor Philippe Sands QC (12 September 2017).
11 Although similar principles have been applied by tribunals, explicit consideration of ‘contributory fault’ or ‘contributory negligence’ is relatively rare. See CF Dugan et al., Investor-State Arbitration (Oxford University Press 2008) 603; TW Wälde and B Sabahi, ‘Compensation, Damages, and Valuation’ in PT Muchlinski et al. (eds), The Oxford Handbook of International Investment Law (Oxford University Press 2008) 1095–6.
12 See Alschner, W, ‘Aligning Loss and Liability – Toward an Integrated Assessment of Damages in Investment Arbitration’ in Jansen, M et al. (eds), The Use of Economics in International Trade and Investment Disputes (Cambridge University Press 2017) 313Google Scholar (arguing that justifications to reduce the amount of recoverable loss ‘are likely to play a more important role in the future’). See also SN Elrifai, ‘Equity-Based Discretion and the Anatomy of Damages Assessment in Investment Treaty Law’ (2017) 34 JIntlArb 835, 867.
13 See Marboe, ‘Compensation and Damages’ (n 6) 680.
14 See Merizalde Urdaneta (n 5) 301–2.
15 UNCTAD, World Investment Report 2015: Reforming International Investment Governance (United Nations 2015) 128.
16 See Merizalde Urdaneta (n 5) 303; B Sabahi et al., ‘Limits on Compensation for Internationally Wrongful Acts’ in M Bungenberg et al. (eds), International Investment Law (Hart Publishing 2015) 1116; I Marboe, Calculation of Compensation and Damages in International Investment Law (Oxford University Press 2017) 121.
17 PCIJ, Chorzów Factory, 1928 PCIJ, Series A, No 17 (Merits). See also A Moutier-Lopet, ‘Contribution to Injury’ in J Crawford et al. (eds), The Law of State Responsibility (Oxford University Press 2010) 639.
18 ILC Articles on State Responsibility (n 5) art 31.
19 ibid, art 31, commentary, para 2.
20 See Moutier-Lopet (n 17) 639. In the specific context of international investment arbitration, see Sabahi et al., ‘Limits on Compensation’ (n 16) 1116; B Sabahi et al., ‘Principles Limiting the Amount of Compensation’ in CL Beharry (ed), Contemporary and Emerging Issues on the Law of Damages and Valuation in International Investment Arbitration (Brill Nijhoff 2018) 325. For a discussion of cases in international law in which damages awarded toward the victim have been reduced without the decision necessarily referring to contributory fault, see J Gill and R Gupta, ‘The Principle of Contributory Fault after Yukos’ (2015) 9 DRI 93, 94.
21 ILC Articles on State Responsibility (n 5) art 39.
22 ibid, art 39, commentary, para 5. See also Moutier-Lopet (n 17) 644.
23 ILC Articles on State Responsibility (n 5) art 39, commentary, para 5.
24 ibid, Part Two.
25 See Merizalde Urdaneta (n 5) 307. However, in the context of investment arbitration, it has been suggested that the wording found in the ILC Articles on State Responsibility is misleading. See eg M Jarrett, Contributory Fault and Investor Misconduct in Investment Arbitration (Cambridge University Press 2019) 22 (‘The reference to reducing damages is unfortunate because it suggests that investment reprisal acts as a reduction on remedies as opposed to liability. This is a mere terminological error induced by the ILC Articles on State Responsibility.’).
26 ILC Articles on State Responsibility (n 5) Part One, Ch V. See also Moutier-Lopet (n 17) 641.
27 See Kantor (n 6) 540; Marboe, ‘Compensation and Damages’ (n 6) 681.
28 Even if the ILC Articles on State Responsibility appear to reject the applicability of Part Two to investment arbitration, this caution has been virtually ignored. See ILC Articles on State Responsibility (n 5) art 28, commentary, para 3 (‘[W]hile Part One applies to all the cases in which an internationally wrongful act may be committed by a State, Part Two has a more limited scope. It does not apply to obligations of reparation to the extent that these arise towards or are invoked by a person or entity other than a State.’). See also J Crawford, ‘Investment Arbitration and the ILC Articles on State Responsibility’ (2010) 25 ICSID Review 127, 132 (‘When it comes to the intersection between investment treaties and the ILC Articles, there is a great deal of disagreement on core questions, including necessity, the application of countermeasures and issues of compensation. Some of these questions are not actually resolved by the ILC Articles but, to the extent they are, tribunals have at least sought to rely on them.’).
29 Emilio Agustín Maffezini v Spain, ICSID Case No RB/97/7, Award (13 November 2000) para 64.
30 MTD v Chile, Award (n 7) para 168.
31 ibid, para 178 (emphasis added).
32 ibid, para 242.
33 ibid, para 243.
34 See MTD Equity Sdn, Bhd. and MTD Chile S.A. v Chile, ICSID Case No ARB/01/7, Decision on Annulment (21 March 2007) para 2.
35 ibid, para 98.
36 ibid, para 99.
37 ibid, para 101.
38 Occidental v Ecuador, Award (n 7) paras 452 and 455.
39 ibid, para 662.
40 ibid, paras 665–668.
41 ibid, para 670.
42 ibid, paras 679–680 (emphasis added).
43 ibid, para 687.
44 Hulley Enterprises v Russia (n 7); Veteran Petroleum v Russia (n 7); Yukos v Russia (n 7). Given that the final awards are substantively identical for all three cases, the rest of this article will only refer to Yukos v Russia. See also Bjorklund, AK and Vanhonnaeker, L, ‘Yukos: The Clean Hands Doctrine Revisited’ (2015) 9 Diritti Umani e Diritto Internazionale 365Google Scholar; Marboe, I, ‘Calculation of Damages in the Yukos Awards: Highlighting the Valuation Date, Contributory Fault and Interest’ (2015) 30 ICSID Review 326CrossRefGoogle Scholar; W Sadowski, ‘Yukos and Contributory Fault’ (2015) 12(5) Transnational Dispute Management 1; C Brown, ‘The End of the Affair?’ 17 JWIT 126.
45 Yukos v Russia (n 7) para 1363. This finding has nevertheless been questioned by some authors. See eg Brown (n 44) 137–8.
46 Yukos v Russia (n 7) para 1374.
47 ibid, paras 1596–1599.
48 ibid, para 1600.
49 ibid, para 1607.
50 ibid, para 1634 (emphasis added).
51 ibid, para 1637.
52 Copper Mesa v Ecuador (n 7) para 6.97.
53 ibid, para 6.99.
54 ibid, paras 6.102, 6.133 and 7.30.
55 Bear Creek Mining Corporation v Peru, ICSID Case No ARB/14/21, Award (30 November 2017).
56 ibid, para 569.
57 ibid, para 567.
58 ibid, para 567.
59 Bear Creek v Peru, Dissenting Opinion (n 10). See also Ng, M, ‘Can Human Rights Counterclaims Succeed in Investment Treaty Arbitration?’ (2018) 15(5) Transnational Dispute Management 1, 16Google Scholar.
60 Bear Creek v Peru, Dissenting Opinion (n 10) para 4.
61 ibid, para 6.
62 ibid, para 39.
63 Occidental v Ecuador, Award (n 7) para 457.
64 Yukos v Russia (n 7) para 1585.
65 Copper Mesa v Ecuador (n 7) para 6.67.
66 MTD v Chile, Award (n 7) para 166.
67 Occidental v Ecuador, Award (n 7) para 452.
68 Copper Mesa v Ecuador (n 7) paras 6.67 and 6.85.
69 Occidental v Ecuador, Award (n 7) para 452.
70 Micula v Romania (n 6) para 926.
71 ibid, fn 180.
72 ILC Articles on State Responsibility (n 5) art 39.
73 Magnus, U and Martin-Casals, M, ‘Comparative Conclusions’ in Magnus, U and Martin-Casals, M (eds), Unification of Tort Law: Contributory Negligence (Kluwer Law International 2004) 259Google Scholar.
74 ibid 259 and 282–3.
75 ibid 260.
76 See eg Dumberry, P, ‘State of Confusion: The Doctrine of “Clean Hands” in Investment Arbitration After the Yukos Award’ (2016) 17 JWIT 229Google Scholar. See also Inceysa Vallisoletana, S. L. v Republic of El Salvador, ICSID Case No ARB/03/26, Award (2 August 2006) paras 240–244.
77 See MTD v Chile, Award (n 7) paras 168–178; Bear Creek v Peru, Award (n 55) paras 565–569; Yukos v Russia (n 7) Part X.E.
78 See MTD v Chile, Award (n 7) para 243; Yukos v Russia (n 7) para 1827.
79 See Thunderbird v Mexico, Separate Opinion (n 10) para 122; Occidental v Ecuador, Award (n 7) paras 665–687; Quiborax v Bolivia (n 9) para 330; Rusoro v Venezuela (n 9) paras 802–803; Burlington v Ecuador (n 9) paras 572–585; Caratube v Kazakhstan (n 9) paras 1184–1195; South American Silver v Bolivia (n 9) paras 874–875; ConocoPhillips v Venezuela (n 9) para 665; Perenco v Ecuador (n 9) paras 344–363.
80 See Gemplus et al. v Mexico (n 9) Part XI; Stati et al. v Kazakhstan (n 9) Part K; Copper Mesa v Ecuador (n 7) Part 6.
81 See MN Alrashid, ‘The Arbitral Tribunal's Discretion in Quantifying Damages’ in IA Laird et al. (eds), Investment Treaty Arbitration and International Law (JurisNet, 2015) vol 8, 351; Alschner (n 12) 287 (arguing that the determination of the amount of damages owed to a successful claimant generally requires a holistic assessment that combines the legal notion of responsibility for an internationally wrongful act by the respondent State and economic notions of loss).
82 See eg Yukos v Russia (n 7) Part X.E.
83 See Jarrett (n 25) 43 (‘Contributory fault is saturated with causation because, at its core, lies one essential ingredient: the claimant also causes the relevant loss. It follows that to acquire an understanding of contributory fault, an understanding of causation is prerequisite.’).
84 See William Richard Clayton, Douglas Clayton, Daniel Clayton Bilcon of Delaware Inc. v Canada, UNCITRAL, Award on Damages (10 January 2019) para 112.
85 See PW Pearsall and B Heath, ‘Causation and Injury in Investor-State Arbitration’ in CL Beharry (ed), Contemporary and Emerging Issues on the Law of Damages and Valuation in International Investment Arbitration (Brill Nijhoff 2018) 85.
86 Copper Mesa v Ecuador (n 7) para 6.97. See also JE Viñuales, ‘Investor Diligence in Investment Arbitration: Sources and Arguments’ (2017) 32 ICSID Review 346, 359.
87 See Pearsall and Heath (n 85) 84.
88 See Bjorklund, ‘Causation, Morality, and Quantum’ (n 5) 436.
89 Copper Mesa v Ecuador (n 7) Part 5.
90 ibid, para 5.62.
91 ibid, para 5.63.
92 ibid, para 5.64.
93 Yukos v Russia (n 7) paras 1373–1374.
94 Marboe, ‘Calculation of Damages in the Yukos Awards’ (n 44) 333.
95 RosInvestCo UK Ltd v Russia, SCC Arbitration V 079/2005, Final Award (12 September 2010). See also Marboe, ‘Calculation of Damages in the Yukos Awards’ (n 44) 333; Sadowski (n 44) 8.
96 RosInvestCo v Russia (n 95) 634.
97 ibid, para 635 (emphasis added).
98 ibid, para 668.
99 ibid, para 670.
100 ibid, para 690.
101 Caratube v Kazakhstan (n 9) para 1193.
102 ibid, para 1192 (emphasis added).
103 ibid, para 1195.
104 ILC Articles on State Responsibility (n 5) art 39 (emphasis added). See also Gill and Gupta (n 20) 104.
105 For notable exceptions, see eg SADC Model Bilateral Investment Treaty Template with Commentary (July 2012); Model Text for the Indian Bilateral Investment Treaty (28 December 2015); Reciprocal Investment Promotion and Protection Agreement between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria (signed 3 December 2016, not yet entered into force); Investment Cooperation and Facilitation Treaty Between the Federative Republic of Brazil and the Republic of India (signed 25 January 2020, not yet entered into force).
106 OECD, Declaration on International Investment and Multinational Enterprises (21 June 1976) OECD Doc No C(76)99/FINAL (1976), Annex 1. For the most recent version, see OECD, Declaration on International Investment and Multinational Enterprises (25 May 2011) OECD Doc No C/MIN(2011)11/FINAL (2011), Annex 1.
107 ILO, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (November 1977). For the most recent version, see Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (March 2017).
108 UN Global Compact, ‘The Ten Principles of the UN Global Compact’ at <https://www.unglobalcompact.org/what-is-gc/mission/principles>.
109 Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and other Business Enterprises, Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework (2011) UN Doc A/HRC/17/31.
110 IFC, Performance Standards on Social & Environmental Sustainability (30 April 2006). For the most recent version, see IFC, Performance Standards on Environmental and Social Sustainability (1 January 2012).
111 Elaboration of an International Legally Binding Instrument on Transnational Corporations and Other Business Enterprises with Respect to Human Rights (2014) UN Doc A/HRC/RES/26/9, para 1.
112 Copper Mesa v Ecuador (n 7) para 6.99.
113 ibid, para 6.99.
114 Convention (No 169) Concerning Indigenous and Tribal Peoples in Independent Countries (signed 27 June 1989, entered into force 5 September 1991).
115 Bear Creek v Peru, Award (n 55) para 664.
116 Bear Creek v Peru, Dissenting Opinion (n 10) paras 10–11.
117 See eg P Dumberry, ‘Corporate Investors’ International Legal Personality and Their Accountability for Human Rights Violations under IIAs’ in A de Mestral and C Lévesque (eds), Improving International Investment Agreements (Routledge 2013).
118 See eg M Krajewski, ‘A Nightmare or a Noble Dream? Establishing Investor Obligations Through Treaty-Making and Treaty Application’ (2020) 5 Business and Human Rights Journal 105.
119 See eg Marcoux (n 2) 83–212.
120 See eg Gill and Gupta (n 20) 95 and 111; Merizalde Urdaneta (n 5) 301; Kantor (n 6) 537; Marboe, Calculation of Compensation (n 16) 125; Sabahi et al., ‘Principles Limiting the Amount’ (n 20) 328.
121 See generally Kantor (n 6). See also Merizalde Urdaneta (n 5) 311; Marboe, Calculation of Compensation (n 16) 125; C McLachlan et al., International Investment Arbitration (Oxford University Press 2017) 442; Elrifai (n 12) 868; Sabahi et al., ‘Principles Limiting the Amount’ (n 20) 328.
122 MTD v Chile, Decision on Annulment (n 34) para 101 (emphasis added).
123 Occidental v Ecuador, Award (n 7) para 670.
124 Yukos v Russia (n 7) para 1637.
125 See Merizalde Urdaneta (n 5) 308.
126 Occidental v Ecuador, Award (n 7) para 687 (emphasis added).
127 Occidental Petroleum Corporation, Occidental Exploration and Production Company v Ecuador, ICSID Case No ARB/06/11, Dissenting Opinion (20 September 2012) para 7.
128 ibid.
129 ibid.
130 In fact, Mr. Yves Fortier acted as the President on both tribunals.
131 Yukos v Russia (n 7) para 1637 (emphasis added). For an analysis of the tribunal's reasoning regarding contributory fault, see Gill and Gupta (n 20) 96–100.
132 Copper Mesa v Ecuador (n 7) para 6.96.
133 ibid, para 6.102 (emphasis added).
134 See NM Perrone, ‘The “Invisible” Local Communities: Foreign Investor Obligations, Inclusiveness, and the International Investment Regime’ (2019) 113 AJIL Unbound 16, 20. Viñuales even considers that the investor wrongdoing in this case should have led the tribunal to consider the claim inadmissible. See Viñuales (n 86) 359–60 (‘[I]t is difficult not to be perplexed by this finding in the light of the very rationale of the concept of admissibility. A State is not only entitled, but it also has a duty to act, under international human rights law, to cease such deliberate misuse of private security forces by a foreign investor. The resort by an investor to such abusive and illegal practices is totally unacceptable, and a claim based on the consequences of such action is clearly inadmissible.’).
135 Bear Creek v Peru, Dissenting Opinion (n 10) para 39 (emphasis added).
136 ibid, para 40.
137 Occidental v Ecuador, Award (n 7) para 687; Yukos v Russia (n 7) para 1637.
138 Copper Mesa v Ecuador (n 7) para 6.102.
139 See Sabahi, B and Duggal, K, ‘Observations on Proportionality, Assessment of Damages and Contributory Fault’ (2013) 28 ICSID Review 279, 289CrossRefGoogle Scholar.
140 See Merizalde Urdaneta (n 5) 302 and 317–21; Sadowski (n 44) 32–3.
141 According to Alrashid, ‘[w]hen faced with a large set of complex facts and the need to carry out a variety of assumptions which are affected by political and economic factors, among other things, discretion is a necessity’ (original emphasis). See Alrashid (n 81) 333.
142 See Gill and Gupta (n 20) 113.
143 The relevance of international investment agreements to address contributory fault in the context of economic crimes has been analysed in Y Kryvoi, ‘Economic Crimes in International Investment Law’ (2018) 67 ICLQ 577.
144 See eg Alschner (n 12) 314.
145 For more information regarding provisions of international investment agreements on compensation, see Marboe, ‘Compensation and Damages’ (n 6) 683–5.
146 Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one Part, and the European Union, of the other Part (signed 30 October 2016, provisionally entered into force 21 September 2017) art 8.39(3).
147 Supplementary Act A/SA.3/12/08 Adopting Community Rules on Investment and the Modalities for their Implementation with ECOWAS (signed 19 December 2008, entered into force 19 January 2009) art 18.
148 SADC Model BIT (n 105) art 19(1) (‘Subject to any other specific directions under this Agreement as to the consequences of a breach of an obligation, where an Investor or its Investment is alleged by a State Party in a dispute settlement proceeding under this Agreement to have failed to comply with its obligations under this Agreement, the tribunal hearing such a dispute shall consider whether this breach, if proven, is materially relevant to the issues before it, and if so, what mitigating or off-setting effects this may have on the merits of a claim or on any damages awarded in the event of such award.’).
149 Draft Pan-African Investment Code (December 2016) art 43(1) (‘Where an investor or its investment is alleged by a Member State party in a dispute settlement proceeding under this Code to have failed to comply with its obligations under this Code or other relevant rules and principles of domestic and international law, the competent body hearing such a dispute shall consider whether this breach, if proven, is materially relevant to the issues before it, and if so, what mitigating or off-setting effects this may have on the merits of a claim or on any damages awarded in the event of such award.’).
150 Supplementary Act (ECOWAS) (n 147) art 12.
151 ibid, art 13.
152 ibid, art 14.
153 ibid, art 15.
154 India Model BIT (n 105) art 26(3).
155 ibid, fn 4.
156 Netherlands Model Investment Agreement (22 March 2019) art 23.
157 For example, the OECD Guidelines provide the following: ‘The Guidelines are recommendations jointly addressed by governments to multinational enterprises. They provide principles and standards of good practice consistent with applicable laws and internationally recognised standards. Observance of the Guidelines by enterprises is voluntary and not legally enforceable’. See OECD (2011) (n 106) para I(1).
158 Interestingly, the previous version of the Netherlands Model Investment Agreement provided that ‘a Tribunal may, in deciding on the amount of compensation, take into account non-compliance by the investor’ (emphasis added). See Netherlands Model Investment Agreement (19 October 2018) art 23.
159 International Bar Association, ‘Consistency, Efficiency and Transparency in Investment Treaty Arbitration’ (November 2018) at <https://www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/Publications.aspx> 6.
160 ibid 7.